Synopsis
As the economy opened and operations resumed partially, fuel price and other expenses were higher than the revenue the company was generating, resulting in losses for FY21 and FY22. The latest results — for Q1FY23 — showed a significant spike in revenue, at Rs 12,855 crore, which shows an increase in demand (QoQ basis). Profit after tax (PAT) for the quarter was still negative (it was -Rs 1,064 crore) as two major costs, an increase in fuel expense and foreign exchange loss, among others, have affected the profitability, even though revenue increased.
Airlines is a capital-intensive industry. Being in the transportation sector, fuel prices account for the majority of the costs for airlines. How will sustained high oil prices impact the margins of airline companies? Will Indigo be able to make money in such a situation is something investors should understand. India is a country where the price of a product or service dominates utility, ultimately determining the demand for the product. When
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